Building a Custody Solution for the Future: Alexandre Kech, CEO, Onchain Custodian

As more and more people switch on to cryptocurrencies and blockchain the need for the institutions and exchanges to have strong and secure custody solutions in place grows.

We’re all familiar with the media horror stories about cryptocurrency exchanges being the victim of hacks, while other exchanges have been in the headlines for equally controversial reasons, for example the collapse of New Zealand exchange Cryptopia, or the loss of assets following the death of the owner of Quadriga CX.

It’s clear there’s significant space to improve, and doing so will directly benefit the exchanges in question by giving their customers the guarantees they need and want to use their services.

Onchain Custodian is one such custody provider. Based in Singapore the team has an impressive set of backers, including Sequoia Capital.

The business also counts NEO’s Da Hongfei among its backers, with the founder of NEO sitting as the chairman of Onchain Custodian’s board.

To find out more about the importance of custody solutions we spoke with Alexandre Kech, CEO of Onchain Custodian.

How did you get into crypto and blockchain and where were you before you joined Onchain Custodian?

I got into crypto from both a personal and professional
angle. On a personal point of view, I started looking at it around 2013 and
started making investments early 2017. I was and still am fascinated by the
concept and I believe it will revolutionize the way value is represented,
recorded and shared.

As part of my last job at SWIFT, as regional Head of
Standards, then Head of Securities & FX Asia Pacific, I had the opportunity
to participate directly in blockchain POC and projects. I became one of the blockchain
champions at SWIFT and was invited to speak at more and more blockchain events.

Meeting professionals in that space convinced me once and
for all that it was the future.

From your
experience at SWIFT what are the most important skills that you have
transferred to the blockchain space?

I am modestly trying to bring common sense, established
professional best practices and the importance of standardization to the
industry. Blockchain and crypto are professionalizing thanks to collaboration
between early believers and converted traditional players having moved, like
me, to the other side.

Our skills are making the industry more innovative, professional, reliable and trustworthy.

Alexandre Kech, CEO of Onchain Custodian

How did you find
the change from the traditional financial world to blockchain?

I’ve been lucky to make the transition surrounded by an
amazing team and board.

We are a great mix of blockchain and traditional
financial world experts and leaders. We learn every day from one another. The
support I was able to get from my colleagues has real smoothened the
transition. It has been a blast so far.

The main differences between the two worlds is around
professionalism and conservatism. I meet many players in the blockchain and
crypto space who oversell their competences, moving from being an ICO advisor
to an STO adviser overnight, for example, whatever the new trend is. Many such
parties have disappeared for good after the crypto winter, but it is still a
challenge to sort between serious players and fools.

The traditional financial world does not have that
professionalism issue that much, but it is so conservative. I appreciate the
speed and dynamism that fintech offers. It is great to be able to have a
customer requirement implemented on our platform in a matter of weeks.

How aware are
institutions and exchanges about the importance of custody? Do you think this
is something that is gradually improving?

It is gradually improving but we’re not there yet.
Exchanges have been the most affected by hacks and are realizing they either
must invest big money and human resources in doing self-custody properly, or
they need to outsource to true professionals.

The big ones are happy to spend. Medium and low size
exchanges have understood that it was, both economically and branding wise,
smarter to partner with independent third-party custodians.

On the investment side, it depends how much traditional
capital market expertise they have. If none, some are still happy to send
private keys by email or have one individual managing the assets on one
physical device lodged in a drawer or, a bit better, in a safe. Operational
disasters make them progressively understand the importance of proper custody managed
by professionals.

More and more traditional funds and asset managers are
entering the space cautiously and for them, there is no question that they need
to use a third-party custodian.

What is the one
thing that needs to happen to propel blockchain and crypto into mainstream use?

My response might surprise you but more Libra projects.
Libra, with all its weaknesses and issues, despite the many justified or not
criticisms it is getting from the historical crypto space, brings one major
advantage -it is forcing all governments and regulators around the word to look
at blockchain and crypto, this time seriously.

Whatever the outcome, it will reduce the ambiguity and
uncertainty about how cryptocurrencies and other tokens, as well as industry
players in that space, will be regulated.

Where do you see
the cryptocurrency and blockchain space in 10 years’ time?

In 10 years, I think blockchain and digital tokens will
have become mainstream to the point that everyday users will not even know
their payment or investment order has been powered by blockchain and their
value ownership is in the form of a token.

New investment opportunities will be accessible to a
broader range of investors than today. Very liquid fragmented ownership of
various assets types (gold, real-estate, fine-art, wine, airmiles, etc),
tradable against fiat currencies or each other on secondary market, will allow
retail and institutional investors to diversify their investments in products
they could not have imagined being able to access.

In 15 years, maybe earlier, I think it will even be
possible to buy a house or a car with a combination of fiat currency, tokenized
assets and crypto currencies either as payment or as collateral for a loan.

How do you see
regulation in the US and European markets affecting the Asian market?

As for any financial services, it is very difficult for a
fintech to deal with regulatory requirements concerning US customers. It is
easier for European clients.

In any case, we currently focus on Asia Pacific customers
at this stage of our development. They are underserved and we want to offer
them a close-to-home, private bank-like service they have difficulty getting
from custodians headquartered abroad.

Regulation in Asia is very different from country to
country but operating from Singapore, we find it easier to deal with. The rules
are clear, and our regulator, MAS, is forward-looking. The other regulators in
the region also tend to take clear stands, whether good or not, on crypto and
other tokens. We are trying to keep a heatmap of the various regulations in the
region as they are constantly progressing.

We have seen
some significant moments recently in the recognition of the space. E.g.
President Trump tweeting about Bitcoin and cryptocurrencies, the US Federal
Reserve Chairman Jerome Powell, calling Bitcoin a ‘store of value’. Generally,
do you think these developments are good news or bad news for the industry?

I will revert to my answer to your previous question
about our industry becoming mainstream. With the Libra project, crypto and
blockchain are now on the table of governments and regulators. There will be
political decisions and regulatory clarification on how our token industry must
comply.

This noise around Libra is also contributing to some
level of education to the masses on a very complex topic. I am just not sure
whether what we hear will effectively help people grasp the amazing benefits
than blockchain and tokens can bring them in the future.